CISI INVESTMENT RISK TAXATION ACTUAL FINAL
EXAMS QUESTIONS AND ANSWERS SURE A+
✔✔When an investor purchases a bond between two coupon periods, what happens to
accrued interest? - ✔✔It's added to the clean price
✔✔New fixed-interest bond issue - 'offer for sale' means: - ✔✔Purchase of the bonds by
a syndicate of banks for subsequent sale to investors
✔✔How do P2P lenders reduce effect of defaults on their portfolio? - ✔✔By aggregating
smaller individual loans
✔✔Are NS&I premium bonds tax-free? - ✔✔Yes
✔✔Cost-push inflation - ✔✔Spending of excess money on goods & services, which
increases demand for labour, which increases wages and therefore unit labour costs.
✔✔Stratified sampling - ✔✔Passive equity strategy,
holding a sample of securities which is representative of index
✔✔Name examples of Leading, coincident, and lagging indicators - ✔✔Leading - stock
market
,Coincident - GDP, retail sales
Lagging - unemployment
✔✔NS&I premium bonds maximum investment and minimum - ✔✔£50,000 per
individual
£25 per individual
✔✔SEIS maximum tax relief - ✔✔up to £100,000
50% max relief (£50K)
✔✔Deemed domicile status - ✔✔UK resident 15 of the last 20 years
✔✔SSASs can lend to the sponsoring employer up to _____ % of net scheme assets -
✔✔50%
✔✔Information ratio assesses: - ✔✔degree to which fund manager uses skill and
knowledge to enhance returns
✔✔Time allotted to reclaim additional SDLT - ✔✔3 years
✔✔2 most common types of open-ended funds - ✔✔- Unit Trusts
- OEICs
✔✔Maximum investment in EIS for tax relief - ✔✔up to £1 million
30% tax relief (£300K p.a.)
✔✔Synthetic ETFs are exposed to ____ risk, unlike physical ETFs - ✔✔counterparty
risk
✔✔VCT income tax relief - ✔✔- 30% relief on max of £200K p.a.
- only on new ordinary shares; must be held 5 years
-NO INCOME TAX ON DIVIDENDS from ordinary shares in VCTs
✔✔By when is the SPA for men and women expected to increase to 67? - ✔✔2028
✔✔REITs themselves receive what tax advantages - ✔✔Exemption from corporation
and CGT on profits made from property investment
✔✔Ijara wa iqtina - ✔✔leasing agreement where customer can buy the item at the end
of the contract
, ✔✔Ijara - ✔✔leasing agreement whereby the bank buys an item for a customer and
then leases it back over a specific period.
✔✔What is stamp duty and when is it paid - ✔✔On transfer of stocks using paper
transfer forms. Charged at 0.5% over £1000 (rounded to nearest £5)
✔✔CREST-based share purchases trigger _____ tax - ✔✔SDRT
✔✔Dilution levies only affect: - ✔✔single-priced funds
✔✔Nikkei 225 Index is ____ -weighted - ✔✔price-weighted
(like the Dow)
✔✔Stamp duty land tax (SDLT) calculation (residential) - ✔✔Charged in portions:
0% - up to 125k
2% - up to 250k
5% - up to 925k
10% - up to 1.5M
12% - over 1.5M
✔✔Income Tax Rates and Taxable Bands - ✔✔0%
£12570
20%
£50270
40%
£150,000
45%
PA reduced by £1 for every £2 over £100k
✔✔Policy switching - ✔✔a form of active bond portfolio management that switches b/w
2 different bonds to take advantage of market conditions
✔✔Franked income - ✔✔Investment trusts receive UK dividends from their investments
with no further tax liability
✔✔Does SDRT apply to corporate bonds? - ✔✔No
✔✔Does SDRT apply to convertible loan stocks? - ✔✔Yes
✔✔PAIF regime - tax is ____ from rental profits and other related income - ✔✔exempt
✔✔Small gift exemption - ✔✔donor can gift up to £250 per person in any one tax year,
(if gift is over £250, all of it is taxable)
EXAMS QUESTIONS AND ANSWERS SURE A+
✔✔When an investor purchases a bond between two coupon periods, what happens to
accrued interest? - ✔✔It's added to the clean price
✔✔New fixed-interest bond issue - 'offer for sale' means: - ✔✔Purchase of the bonds by
a syndicate of banks for subsequent sale to investors
✔✔How do P2P lenders reduce effect of defaults on their portfolio? - ✔✔By aggregating
smaller individual loans
✔✔Are NS&I premium bonds tax-free? - ✔✔Yes
✔✔Cost-push inflation - ✔✔Spending of excess money on goods & services, which
increases demand for labour, which increases wages and therefore unit labour costs.
✔✔Stratified sampling - ✔✔Passive equity strategy,
holding a sample of securities which is representative of index
✔✔Name examples of Leading, coincident, and lagging indicators - ✔✔Leading - stock
market
,Coincident - GDP, retail sales
Lagging - unemployment
✔✔NS&I premium bonds maximum investment and minimum - ✔✔£50,000 per
individual
£25 per individual
✔✔SEIS maximum tax relief - ✔✔up to £100,000
50% max relief (£50K)
✔✔Deemed domicile status - ✔✔UK resident 15 of the last 20 years
✔✔SSASs can lend to the sponsoring employer up to _____ % of net scheme assets -
✔✔50%
✔✔Information ratio assesses: - ✔✔degree to which fund manager uses skill and
knowledge to enhance returns
✔✔Time allotted to reclaim additional SDLT - ✔✔3 years
✔✔2 most common types of open-ended funds - ✔✔- Unit Trusts
- OEICs
✔✔Maximum investment in EIS for tax relief - ✔✔up to £1 million
30% tax relief (£300K p.a.)
✔✔Synthetic ETFs are exposed to ____ risk, unlike physical ETFs - ✔✔counterparty
risk
✔✔VCT income tax relief - ✔✔- 30% relief on max of £200K p.a.
- only on new ordinary shares; must be held 5 years
-NO INCOME TAX ON DIVIDENDS from ordinary shares in VCTs
✔✔By when is the SPA for men and women expected to increase to 67? - ✔✔2028
✔✔REITs themselves receive what tax advantages - ✔✔Exemption from corporation
and CGT on profits made from property investment
✔✔Ijara wa iqtina - ✔✔leasing agreement where customer can buy the item at the end
of the contract
, ✔✔Ijara - ✔✔leasing agreement whereby the bank buys an item for a customer and
then leases it back over a specific period.
✔✔What is stamp duty and when is it paid - ✔✔On transfer of stocks using paper
transfer forms. Charged at 0.5% over £1000 (rounded to nearest £5)
✔✔CREST-based share purchases trigger _____ tax - ✔✔SDRT
✔✔Dilution levies only affect: - ✔✔single-priced funds
✔✔Nikkei 225 Index is ____ -weighted - ✔✔price-weighted
(like the Dow)
✔✔Stamp duty land tax (SDLT) calculation (residential) - ✔✔Charged in portions:
0% - up to 125k
2% - up to 250k
5% - up to 925k
10% - up to 1.5M
12% - over 1.5M
✔✔Income Tax Rates and Taxable Bands - ✔✔0%
£12570
20%
£50270
40%
£150,000
45%
PA reduced by £1 for every £2 over £100k
✔✔Policy switching - ✔✔a form of active bond portfolio management that switches b/w
2 different bonds to take advantage of market conditions
✔✔Franked income - ✔✔Investment trusts receive UK dividends from their investments
with no further tax liability
✔✔Does SDRT apply to corporate bonds? - ✔✔No
✔✔Does SDRT apply to convertible loan stocks? - ✔✔Yes
✔✔PAIF regime - tax is ____ from rental profits and other related income - ✔✔exempt
✔✔Small gift exemption - ✔✔donor can gift up to £250 per person in any one tax year,
(if gift is over £250, all of it is taxable)
